Term deposit investors shifting to SMAs

While term deposits did not present much risk for investors, many were increasingly looking for stable returns from their defensive allocations.

27-Jun-2017

By Megan Tran

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Moving away from cash term deposits to newer investment structures such as separately managed accounts (SMA) was the future of defensive investing, according to fixed income firm Australian Corporate Bond Company (ACBC).

The company today announced it had expanded its pure fixed income SMA solution onto Macquarie Wrap, the result of adviser feedback as clients increasingly looked to move away from low-yielding term deposits.

Speaking to financialobserver, ACBC chief executive Richard Murphy said while term deposits did not present much risk for investors, many were increasingly looking for stable returns from their defensive allocations.

XTB chief investment officer Ian Martin said the ACBC-related firm had worked with advisers to construct a portfolio that could reduce exposure to interest rate sensitivity.

“That’s hitting the spot advisers need in portfolios to satisfy their requirements,” Martin said.

He said the migration from bank term deposits to the SMA structure was an easier transition for retiree investors than investing in other fixed income instruments, such as long-dated securities or government bonds.

 The inclusion on Macquarie Wrap marked the third platform addition for ACBC’s SMA, with the strategy added to Praemium and SuperSMA in February.

Martin said the inclusion of the SMA model portfolio, which took several months of research and testing to develop, was a sign of continued support for fixed income model portfolios across numerous distribution channels.

“I developed the model portfolio in direct response to demand from advisers and will continue to work closely with adviser groups to make it more broadly available,” he said.

“Our aim is to provide transparent and easy-to-access fixed-income solutions for both financial advisers and individual investors.”

Since its inception in 2015, XTB has unveiled a series of solutions to make fixed income more accessible, including white-labelled XTB model portfolios for adviser networks.

Martin said the appeal for approachable bespoke solutions for advisers was the main feature of the group’s products.

“We are proud to be driving fixed income innovation that helps Australian investors achieve more balanced investment portfolios,” he added.

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